Vermont Yankee tax hike plan met with warning - from state's lawyers

Apr. 20, 2012

MONTPELIER — Although two lawyers told them it would be a risky move, legislators are poised to approve a tax increase on the Vermont Yankee nuclear power plant.

“There is some legal risk associated with increasing the generating tax,” Assistant Attorney General Scot Kline told the Senate Finance Committee this week.

Kline said the tax change could be challenged in court. After reviewing the pending court case between Vermont Yankee and the state and also a pending Public Service Board case, Kline said the Attorney General’s Office decided lawmakers should be told of the risk. Peter Griffin, a legislative lawyer, told the committee he agreed with Kline’s assessment.

Gov. Peter Shumlin’s administration proposed a new tax rate this week to the Senate Finance Committee that calls for charging the Vernon plant 25 cents per kilowatt hour. That amounts to about $12.5 million for a full year, compared to the $5 million in generating tax Vermont Yankee now pays.

Vermont Yankee pays another $5 million to the Clean Energy Development Fund through two agreements with the state that end this year. Some of the new tax would be directed to replace the lost revenue for that fund, Administration Secretary Jeb Spaulding said.

Spaulding argued that the increase in tax doesn’t amount to much of a change in the overall amount Vermont Yankee would be paying, given that those agreements will end. Although the plant’s initial operating permit expired in March, the plant has continued operating as officials await resolution of the federal court case and the Public Service Board case.

Gerry Morris, a lobbyist who represents Yankee owner Entergy Corp., argued that the agreements for the development fund contribution were always slated to end this year. Whether or not they continue is up to the Public Service Board, not the Legislature.

Spaulding said the administration would not ask the Public Service Board to have Vermont Yankee continue the development fund contributions.

Morris said Entergy opposes the new tax rate. “This proposal by the Shumlin administration will wreak havoc on the plant’s business plan,” he said. He said he couldn’t comment on whether Entergy would challenge the tax in court.

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Spaulding argued there is risk that any legislation will be challenged, but that lawyers have told him the risk in this case is small. The House overwhelmingly passed a slightly different version of the tax that represented a similar increase, he noted.

Sen. Randy Brock, R-Franklin, a member of the Senate Finance Committee and gubernatorial candidate, asked Griffin to characterize the size of the risk, but Griffin said he couldn’t predict that.

Senate Finance Committee Chairwoman Ann Cummings, D-Washington, said she agrees that the tax is justified as similar to what other states charge. The committee is expected to approve the tax.

Cummings said, “If we let larger organizations threaten us and thus not charge them their fair share, then we are not doing our duty.”

The tax would start July 1 and replace the existing generating tax on Vermont Yankee, Spaulding said. In the first fiscal year, it would generate about $9.5 million because quarterly payments wouldn’t start coming in until October, Spaulding said, but subsequent amounts would total $12.5 million a year.

The administration is asking the Senate Appropriations Committee to divvy the money up among the Clean Energy Development Fund, the state’s General Fund and Windham County’s regional economic development to make up for the eventual economic hit whenever Vermont Yankee closes. In the 2013 budget, that money would be slated for facilities for the Community College of Vermont and Vermont Technical College in Brattleboro, Spaulding said.